Abuja: The United States-Israel-Iran tensions are unlikely to significantly derail the stock market from its performance in the second quarter (Q2), Prof. Uche Uwaleke says. Uwaleke, the President of the Capital Market Academics of Nigeria (CMAN), disclosed this in an interview with the News Agency of Nigeria.
According to News Agency of Nigeria, Uwaleke noted that the domestic orientation of the market serves as a buffer against global shocks, including the recent Middle East crisis experienced in the first quarter (Q1). He emphasized that the dominance of domestic investors is a key factor providing this insulation.
Uwaleke projected that the successful completion of banking recapitalisation and the potential listing of the Dangote Refinery will contribute to a constructive market outlook for the remainder of 2026. He highlighted the banking sector, particularly Tier-1 banks, as likely key drivers of market growth due to post-recapitalisation expectations and strong earnings outlook.
He also pointed out that consumer goods and industrial stocks, especially those benefiting from improved foreign exchange access and reduced input cost volatility, are expected to perform well. Additionally, energy-related players are set to attract attention, particularly with the anticipated listing of the Dangote Refinery before the end of the third quarter, which could serve as a major catalyst for the market.
Retail investors, Uwaleke noted, tend to gravitate towards fundamentally strong, well-known companies with consistent dividend histories and clear growth narratives. Banking stocks, especially in the context of recapitalisation, fit this profile. Companies with strong earnings visibility, resilience to FX volatility, and potential for capital appreciation are also likely to attract sustained retail interest. The accessibility of digital trading platforms has amplified participation in these sectors.
Speaking on the indices that spurred Q1 market growth, Uwaleke attributed it to a combination of improving macroeconomic fundamentals and renewed investor confidence. Key policy reforms by the Central Bank of Nigeria, particularly around foreign exchange management, have helped to stabilize the naira and moderate inflationary pressures. Additionally, the steady accretion to gross external reserves, now about $50 billion, has strengthened confidence in the country’s ability to meet external obligations.
He stated that improved corporate earnings and attractive valuations at the start of the year encouraged both institutional and retail participation. Uwaleke remains optimistic about the market’s future, citing consistent drivers from Q1, such as moderating inflation, improving exchange rate stability, and consistent policy direction. However, he cautioned about potential risks including profit-taking by investors, monetary tightening if inflation rises unexpectedly, and global uncertainties.
Regarding the country’s T+1 settlement cycle transition by May 29, Uwaleke expressed confidence in the market’s preparedness. He mentioned significant investments in market infrastructure, including trading platforms, clearing systems, and risk management frameworks, as evidence of this readiness. Market operators, custodians, and regulators have been actively engaging in capacity building and system upgrades to ensure a smooth transition. Despite potential initial adjustment challenges, Uwaleke believes the ecosystem is robust enough to handle the change, particularly with the new recapitalisation requirements by the Securities and Exchange Commission for capital market regulated entities.